REFLECTIONS ON THINGS I HAVE READ RECENTLY

BLOG 214

 

REFLECTIONS ON THINGS I HAVE READ RECENTLY

 

I have read a number of odd things lately some of which I thought I’d share.  The first was an article by John Lloyd (who I have not heard of but is apparently an eminent journalist) headed “Objectivity is under attack in America: the truth is up for grabs”.  He told me that media was “central to society’s evolution and should serve citizens by discovering and telling the truth”.  I doubt that is controversial!  He acknowledges that nowadays “Facebook and Twitter are where most young people get their views” and bemoans that “these wealthy and powerful corporations have only a fleeting relationship with journalism’s ethical commandments”.  To reinforce this, he says that it has recently been revealed that “Facebook’s owner, Mark Zuckerberg had, in 2017, told his engineers to adjust the algorithms to soften any adverse attacks on conservative media and cease to show favour to liberal sites …  This move would be anathema to ethical journalism”.

 

I was astounded to read this and still am.  Let me paraphrase that quote.  It goes against ethical journalism for the proprietor of a journal to tell his staff to try to be unbiased and not to favour liberal views.  Isn’t being unbiased fundamental to “telling the truth”?  Is John’s argument that ethics and liberalism are the same thing and it is impossible for a journal to act ethically unless it is willing to adopt a liberal stance?

 

I stopped reading a daily newspaper a couple of years ago after I formed the view that The Times version of journalism was to say, “here is one side’s view, here is the other, they obviously can’t both be true but we can’t be bothered to search out the truth for you”.  That is what traditional journalism used to do.  I am not a user of Facebook, but now I know that it tries to be unbiased, perhaps I should give it a try.

 

Next, I read a press release by the Department for Business, Energy & Industrial Strategy telling me what a talented person Kate Bingham, the Chair of the Vaccine Taskforce, is.  They were apparently stung to do so by an article in the Sunday Times that “made a series of allegations and insinuations about Kate and her role”.  I can understand Kate Bingham being upset about inaccurate allegations.  But we, the taxpayers, fund the DBEIS and it seems an odd use of our funds for the Government itself to take a stand against press comments about the head of a Quango, rather than leave the individual – who from the CV the DBEIS helpfully gave me, seems likely to be capable of taking on the Sunday Times – to fight her own battle.  Has Boris Johnson set up a new Department of Criticism that in future is going to leap into action every time the press says something nasty about a civil servant or a government appointee?  If so, it is going to be very busy!

 

No one would expect me not to mention HMRC at all.  My eye was caught by an HMRC Brief headed, “VAT liability of payroll services”.  Actually it wasn’t about payroll service, or at least only indirectly.  It was about Welfare Services.  The EU is in favour of helping the disabled.  It requires us to exempt from VAT welfare services provided by a charity to disabled people.  Cheshire Centre for Independent Living is a charity.  It realised that the government gives financial help to the severely disabled to enable them to employ a personal assistant to help them live in their own homes.  I am sure most of us will think that is a good thing.  Cheshire realised that to employ a personal assistant, a disabled person has to cope with PAYE and the other burdens the State imposes on employers.  That is difficult for many disabled persons, so Cheshire decided (for a fee) to take away that burden by offering a payroll service to disabled persons.  It assumed that was a welfare service.  My dictionary defines welfare as health and well-being.  The service clearly provides both to the disabled persons.  Of course, HMRC disagreed.

 

Cheshire appealed to the First-tier Tribunal and won.  That is where the HMRC takes over.  It proudly tells us that, faced with this decision, HMRC sprang into action to protect the VAT system.  It discovered a new case that it had overlooked before the FTT.  It went back to the FTT and asked for permission to appeal on the basis of that new case.  It went back to Cheshire and told them that they were bound to lose an appeal because of that case.  At that, Cheshire gave up (had they defended the appeal, they would have been liable for HMRC’s costs).  HMRC then asked the Upper Tribunal to set aside the decision of the FTT.

 

That is what the HMRC Brief is about.  HMRC wanted to tell us how proud they are that, with a great deal of effort (and no doubt cost), they have been able to uphold their view that helping a disabled person to live some sort of a normal life by taking off of their hands an obstacle from doing so is not welfare.  I hope that you are proud of how assiduously HMRC fight to protect your money by forcing a few disabled people to have to pay a few quid in VAT.  I’m not!

 

And finally, are you looking forward to your virtual Christmas party?  Someone sent me a link to an item on the HMRC website which explains the tax position.  Most know that in real world parties you can wine, dine and entertain your staff at Christmas without the State demanding tax from the employees, provided that the total costs do not exceed £150 per head.  The person who asked the question explained that she would like to hire an external entertainer/comedian to perform virtually and to send a hamper of food or drink to the employee in place of being able to provide a meal.  HMRC first emphasised that the £150 is per head, not per employee.  I assume this means that an employer needs to have a system in place to ensure that an employee’s spouse and children cannot look over his shoulder at the virtual entertainment as they would then count as extra heads to whom cost needs to be attributed.  HMRC seem happy with the entertainer, but apparently do not think that food and drink are needed at a party as they consider that this will give rise to a benefit-in-kind if it is provided at the virtual party.  To be fair, it may be the hamper itself that worries HMRC.  Maybe they would accept a box of mince pies and a packet of tea delivered to an employee’s home as an integral part of partying.  The questioner did not ask about a CD of songs to dance solo to, so I don’t know whether HMRC would regard dancing as partying.  I suspect not.

 

So, have a happy austere, Christmas with the compliments of Uncle Rishi – but don’t expect the taxpayer to help with your turkey and sprouts or your glass of wine this Christmas.

 

  

ROBERT MAAS 

RISHI SUNAK'S BREXIT BAFFLEMENTS

 

BLOG 213

 

RISHI SUNAK’S BREXIT BAFFLEMENTS

 

I normally visit the USA every Autumn and spend some time in Chicago attending both the Illinois Society of CPAs annual event and the Chicago Jazz Festival and trying to fit in a couple of Chicago Cubs games.  I missed out this year but am keeping my fingers crossed for next year.  I mention this because there were a few acts at the Jazz Festival last year that I particularly liked.  I thought of buying their CDs at the festival, but thought I’d probably get them cheaper on Amazon when I got home.  I overlooked the fact that even Amazon can’t stock everything and ended up tracing the local Chicago record company and buying mail order from them.  Buying mail order from the US obviously means that I have to pay VAT and Customs duty to import the CDs.  The system is that the Post Office pays these and insists that I repay them (plus a small fee for their trouble) before they hand over the CDs.  This seems to me to be a sensible system that works well.  It applies where the value of goods is under £135.

You may have noticed that when things are sensible and work well, sooner or later the government will scrap the system and replace it with something much less suitable.  This is an example of Hutter’s law (promulgated by a former City Editor of the Sunday Telegraph) which is that “in government, improvement means deterioration”.

From 1 January, the Post Office will no longer collect my VAT and Customs duty next time I import CDs into the UK.  Instead, the small record company in Chicago will need to register for UK VAT and do quarterly VAT returns if it continues to make such low value consignments to the UK.

What does the change achieve?  I wish I knew.  The most likely answer is a loss of tax and duty to the Exchequer, either because the record company does not know it needs to register or because, if it finds out, it will refuse to accept order from UK residents.  I somehow doubt that is what Rishi Sunak intends from the change though.

I appreciate that HMRC will publicise the change on their website, but somehow doubt that the HMRC website is regarded as essential reading by the average shopkeeper in Sydney, or record company in Chicago.  It is not even regarded as essential reading by most people in the UK let alone the rest of the world.  Does Rishi intend to make it a condition of his promised trade deals with other countries that the other country must explain to its populace that, if they want to accept orders from people in the UK, even for tiny amounts, they will need to register for VAT in the UK and, once in the UK VAT system, will have to complete quarterly VAT returns indefinitely (unless and until they can convince HMRC that they do not intend to make any future sales to UK residents)?

I don’t have a clue whether my Chicago record company has other UK customers.  I may be the only one.  If it has very few, it would be crazy to accept orders from the UK after 1 January because the administrative costs of dealing with VAT will far outweigh the profit it can make from UK sales.

I suspect that I am not the only person who buys things over the internet from overseas – or rather who likes to buy things from overseas but will be rebuffed from doing so after 31 December.

Fortunately, when I do go to America, HMRC have said that from 1 January 2021 the amount I can bring back without having to go through the Red Channel at Heathrow “will also be significantly increased … providing one of the most generous allowances anywhere in the world”.  The limit goes up to £390 (unless I travel on a private plane or yacht when for some reason best known to Rishi it is only £290).  In addition, I will be able to bring in 42 litres of beer, 18 litres of still wine and 4 litres of whisky – assuming that is, I feel up to carrying them and British Airways excess luggage charge is not going to exceed the VAT and duty if I buy them in the UK instead.  Most spirits nowadays are sold in 70cl bottles, so 4 litres is a curious figure.  Five bottles and one half bottle will come up to 3.85 litres and it surely would not have cost the Exchequer too much to make it 4.2 litres = 6 bottles, rather than 4.  This change of course also makes it apparent that under Boris’ Brexit there will be no return to the British Imperial measures; we will still be forced to drink in French litres instead of good old-fashioned English pints.

It is not only us UK citizens that Rishi wants to inconvenience.  From 1 January, foreigners buying goods in the UK will no longer be able to get them duty-free unless they can persuade the shop to pack them up safely and deliver them to the buyer’s home address.  Again, will the cost that the supplier needs to charge for packing them justify the VAT saving.  And they will no longer be able to buy electronics and clothing (and other unspecified items) duty-free at Heathrow – apparently because Rishi is worried that you and I will want to take them to America with us and bring them back home when we return, “putting High-Street retailers at a disadvantage”.

ROBERT MAAS